Motor Trade Association labels ‘ute tax’ a success after emissions on imported cars plummet 19%

Saturday, 2 September 2023

The average carbon emissions of new and used imported cars has dived since the Clean Car Discount took full affect in April last year, Transport Ministry figures show.

The average light passenger vehicle imported in the 15 months to June 30 emitted 151 grams of carbon dioxide per kilometre-travelled, down 19% on the average of 186 grams per kilometre-travelled in the 15 months before the “feebate” policy took effect.

The drop was equivalent to the emissions reductions achieved during the entire 11-year period before the Clean Car Discount was imposed.

Motor Trade Association chief executive Lee Marshall said the scheme – which has seen buyers of high emission vehicles subsidise purchases of EVs, hybrids and smaller petrol cars by up to several thousand dollars – had been a success, despite a concern it had punished some poorer petrol-car buyers.

“It has been effective in influencing the choices of what vehicles get brought into the country,” he said.

Green Party transport spokesperson Julie Anne Genter said there was no question the policy had made a big impact changing people's behaviour “and also the car importers’ behaviour”.

The National Party has committed to axing the Clean Car Discount, which it has labelled a “ute tax”, if it forms the next government.

The entirety of the 19% emissions decline occurred in the quarter immediately following the policy taking full effect, but National’s transport spokesperson Simeon Brown suggested there was element of coincidence in the timing.

There had been a significant increase in the availability of low-emission vehicles in the past couple of years “and it happens they put the policy in at the same time that availability increased”, he said.

Marshall suggested axing the Clean Car Discount might have little effect in practice, despite the impact he attributed to the policy.

That was because National had committed to retain the more-recently introduced Clean Car Standard, which financially penalises car importers if they fail to keep pace with stepped annual reductions in the emissions of new and used imported vehicles.

The Clean Car Standard largely overlapped with the Clean Car Discount and would continue to result in the cross-subsidisation of lower emission imports by more fuel-hungry ones, but through a mechanism that would not be so obvious to consumers, he said.

In order to bag the profit from selling a higher emission car that exceeds the target set out in the Clean Car Standard without incurring a penalty, an importer would now need to import a low emission vehicle that undershot the target by the same amount, creating a continued incentive for cross-subsidies.

Scrapping the Clean Car Discount and relying solely on the Clean Car Standard to reduce emissions might mean that instead of seeing that a $60,000 EV or hybrid would only cost $53,000 after a “feebate”, consumers might simply see a $53,000 sticker on the car in the first place, Marshall said.

“One policy is focused on the customer, one's focused on the manufacturer. They're both really doing the same thing, but just in different ways. It's probably not necessary to do both.”

But Brown gave a strong hint that the party would water down some of the emissions-reduction targets set out in the Clean Car Standard, in the wake of arguments from the car industry that the targets that have been set for 2025 to 2030 are too ambitious, if it won the election.

Marshall said the industry was concerned about the target for 2026, when importers would be penalised if their average imports emitted more than 85g/km, which is lower than the emissions produced by the most efficient Suzuki Swift petrol car.

“There's not a combustion engine vehicle that I'm aware of that performs at or under that level,” he said.

If the Government stuck to the planned stepped reductions, that might result in car buyers keeping their existing vehicles for longer until the industry caught up by supplying more fuel-efficient vehicles.

That in turn would come at the cost of a trade-off against the safety of the cars on the road, he said.

“We would broadly support anything that would see the age of the fleet in the country modernised.”

Brown said National would announce a policy concerning those issues in the coming weeks.

“The targets set out in the Clean Car Standard need to be achievable,” he said.

“As it's currently set, it's going to be impossible to meet it in a couple of years time; importers will need to import cleaner cars than are being produced in Europe.”

Nevertheless, the Clean Car Standard was needed to ensure New Zealand did not become “a dumping ground” and that it got the “clean mix of cars that New Zealanders need”, Brown said.

“Within a few years, the only vehicles that are going to be manufactured will be either electric or hybrid,” he said.

Genter agreed with Marshall that the Clean Car Standard on its own could “potentially” result in the continuation of cross-subsidies, but disagreed that made a separate feebate scheme redundant, saying the two policies worked well together.

The feebate scheme had been so successful in changing buyers’ behaviour that importers could rack up “credits” in the early years of the Clean Car Standard that they could use to compensate for missing its targets in later years, which would make relying on the standard alone less effective, she said.

The fact National was leaning towards relaxing the targets in the Clean Car Standard showed it was not serious about reducing carbon emissions, Genter said.

“If they're not going to do anything on a price incentive, and they're going to dial back the standards, we're going to shift at an even slower rate when we need to shift at a faster rate.

“It's a real missed opportunity on their part to show some cross-party support for policies that New Zealanders benefit from that also protect the climate,” she said.

Average emissions of light vehicle imports before and after the ‘ute tax’

Before:

Q1 2021: 187g/km

Q2 2021: 188g/km

Q3 2021: 178g/km

Q4 2021: 181g/km

Q1 2022: 194g/km

After:

Q2 2022: 150g/km

Q3 2022: 150g/km

Q4 2022: 152g/km

Q1 2023: 150g/km

Q2 2023: 151g/km

(Source: Transport Ministry)